Before scrolling down the page for different car loans, it’s time for a wake up call.
If you have bad credit and need a loan to get wheels, an important first step in your search should be to change your mind-set from “new” to “previously owned” as you picture your dream vehicle. That’s because the majority of lenders will not be keen on giving you high car loans with bad credit.
This makes entirely good sense: lenders will be reluctant to finance $25,000 for someone with poor credit, but they might be open to giving someone like you $5,000.
That’s not all bad. There are scores of great previously owned cars on the market, and you can find reliable transportation for $5,000 if your commute does not run your vehicle into the ground and over to the repair shop every few weeks.
Bad Credit Car Loans Usually Means Going Used
Another plus for a smaller loan for a used vehicle is that it will force you to live within your budget, a built-in discipline that you probably could use. Getting under the pile of another $25,000 in debt will do you no good. Stop dreaming about a new luxury vehicle and set your sets on a much more affordable used car.
If you need more incentive to go used, think about what a poor investment that vehicles truly are, losing thousands off their value as soon as they are driven off the lot.
In terms of percentage of investment lost, a previously owned vehicle makes much better financial sense.
So, go smart, go cheap, get what you can.
Be prepared to hear that car loans for people with bad credit are usually disbursed for the purchase of previously owned vehicles, not shiny new Mercedes. You will appreciate your somewhat forced choice the first time a payment is due, and you see a smaller amount in the box stretched over a shorter period of time.